RBI’s liquidity measures boost market sentiments. Here’s what investors should do

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Indian stock markets ended almost 1% higher as RBI’s liquidity measures to support the economy amid the second wave boosted investors’ sentiments.

The Sensex rose as much as 489 points or  0.88% to hit an intraday high of 48,743 and Nifty 50 index touched an intraday high of 14,632.45.

Broader markets supported the rally with the Nifty Smallcap100 index gaining 1%

Barring Nifty Realty, all other sectoral indices closed in the green. Financial and pharma stocks led the rally as RBI  Governor Shaktikanta Das announced a special liquidity facility for the healthcare sector.

The Nifty Bank ended 1.6% higher, while Nifty Pharma rose 4% followed by Nifty PSU Bank, Nifty IT and Nifty Metal.

Market breadth was positive with the fear index, VIX, closed 4.6% lower.

Sun Pharmaceutical Industries, UPL, Axis Bank, IndusInd Bank and Kotak Mahindra Bank were the top gainers on the Nifty50, while Adani Ports & SEZ, Bajaj Finance, SBI Life Insurance, Asian Paints and Hindustan Unilever were the top index losers.

Other key measures by the RBI included relief measures which involved provision of term liquidity facility of Rs  50,000 crore on a priority basis for the healthcare sector. The central bank has asked lenders to provide a fresh moratorium to certain small borrowers, which will be available to individuals and small and medium enterprises that did not avail any restructuring in 2020.

S Ranganathan, Head of Research, LKP securities, sharing insight on the market move today said, “The RBI sops and MSCI rebalancing next week have propelled indices higher by a percentage led by pharma with good support from Banks. The broader market witnessed keen interest in shipping stocks and select PSU stocks.

Here’s how experts see markets trading on Thursday

Shrikant Chouhan, EVP, Equity Technical Research, Kotak Securities

Technically, post 4 May’s sharp fall, today’s market is trading within range which clearly indicates indecisiveness between bulls and bears.

The nifty has formed inside the body candle formation near the 20 day SMA and index once again managed to close above the 20 day SMA level, which is broadly positive for the market. We are of the view that, in the short run 14500 should be the sacrosanct support area for the positional traders, above the same we can expect continuation of uptrend up to 14750 further upside may also continue which could lift the index up to 14820. On the flip side, trading below 14500 could possibly open one more correction wave up to 14,450 levels.

Manish Shah, Founder, www.Niftytriggers.com Nifty ended the day higher. Nifty is toggling in a range of 15,050- 14,250 for several weeks with breakout, not in sight.  The rule is that the longer the time taken in a base, the faster and longer will the result. Nifty has to clear 15050 with a strong conviction candle for a sustained move on the upside.

If Nifty breaks above 14,670 expect a rally to 14,830-14,850 and above that to 15,000 over the next 2-3 days. Tomorrow is the weekly expiry a break above 14,670 could mean a nice play on the long side for weekly expiry players. Major support is at 14,480-14,450. A break below this and we could see a drop to 14,350.

Ajit Mishra, VP – Research, Religare Broking 

Markets traded volatile for yet another day but managed to end higher. The timely intervention by the apex bank has relieved the participants to some extent amid the prevailing uncertainty.

However, it failed to trigger a decisive move in the benchmark indices and we might see further consolidation. On the flip side, there’s no shortage of trading opportunities on the stock-specific front so participants should align their positions accordingly while keeping a check on leveraged trades.